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CARBON MARKETS REGULATION:THE CASE FOR A CO2 CENTRAL BANK
Christian de PerthuisParis-Dauphine University, Climate Economics Chair
Paris, September 9th, 2011
2
La régulation des marchés du carbone : principales questions
Les dysfonctionnements observés et la démarche « Market oversight enhancement”. Trois questions :– Sécurité des infrastructures– Statut juridique des quotas de CO2– Articulation avec régulations existantes
L’enjeu du traitement de l’information La « banque centrale du carbone »
– Objectifs de long terme et cibles intermédiaires : quel partage des rôles avec l’autorité publique ?
– Régulation des marchés : faut-il des prix cibles ?– Volet institutionnel : l’organisme indépendant organisateur des
enchère, embryon de la BCE ?
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Main failings on the European carbon market
2008 2009 2010 2011 2012 2013
End 2008 Start of VAT frauds detected in higher
EUAs traded volume
Summer 2009 VAT frauds
estimated at €5 billion
May 2010 European Commission amends the method of
levying VAT
March 2010 Recycling of CER from Hungarian
registry
April 2010 European Commission
amends registries regulation concerning the recycling of CER
January 2011 Theft of EUAs amounted to €50
million at least European commission closes
registries and suspends transactions on EUAs
April 2011 European Commission
authorizes the reopening of all
national registries
2013 Start of the third
trading period
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The task of a CO2 central bank compared to a standard central
bank Monetary Market Carbon Market
Final objective Long-term monetary stability Short- and long-term emissions reduction at lowest cost
Market oversight Integrity and liquidity of transactions Integrity and liquidity of transactions
Price instrument Interest rates Carbon prices
Quantitative regulation
Primary market Supply of central money (M0) Allowances auctioning
Secondary market - Open Market (sell and buy monetary assets) - Exchange rate
- Sell and buy carbon assets
- Links with other markets (offsets, other cap and trades, etc.)
Lender of last resort Refinance banks in the event of liquidity crisis
Additional allowances supply used as a “safety valve”
Reporting to public authorities (European Council, European Parliament and Commission)
- Annual and quarterly reports on the monetary and economic situation
- Public hearings in the EU Parliament
- Annual report on the carbon price and on the GHC emissions reduction long-term path
- Quarterly reports on EU-ETS and carbon price
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Supply and demand equilibrium
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Friday Lunch Meeting
Thank you for your attention!
For further information please visit our website :
www.chaireeconomieduclimat.org